Tuesday, 13 December 2011

Up in the Air

You know about how when you need to get somewhere real far in a hurry..dear reader, the Indian Railways, that epitome of punctuality just doesn't do it for you. So, in this country, we usually take a flight, which means we can stare at pretty airhostesses, get some free food, and get to look at the Earth at impossible angles from the horizontal. Flying is a thrill, no matter which airlines you choose, primarily because you're so used to the railways, getting anywhere in under 4 hours without cockroaches crawling out of your seat seems luxurious. And flying, apparently is also a very very bad business decision, judging by the airlines in our country.

Which begs the question: Why do so many businessmen invest so much into airlines. I mean, all those shiny new jets cost money, don't they. GoAir, owned by Jehangir Wadia, who incidentally also owns a biscuit company many of you may have heard of, Britannia, has placed an order worth $.7.2 billion for new aircraft, and a few biscuits on the side. This is not a small amount of money to invest in anything, and when all else is considered, money could generate much better returns if invested in something else, or maybe given to Ivan Boesky. The point is, why, if airlines are dropping left, right and center out of the sky, do businessmen still insist on starting new ones, at tremendous losses to their pocket and their image. Are the problems faced by most airlines congenital? or are they the victim of some massive government lapse in policy?

Well, the reason, dear reader, why you can still catch a flight to Aizawl(not that you would want to, of course), is because you want to, and can afford to. It's as simple as that. You see, Indian flyers have a threshold value, set ticket prices higher, and no one will fly. Set ticket prices at the threshold level though, and all of a sudden you have waay too many fliers. It is the flirtation with fares that has proved most dangerous to the airlines. Sure, they may blame rising fuel prices, a weaker rupee, lack of government support..and little green men. The only reason that most airlines got into this industry was because they thought they could hit that threshold value of fares, and thus see a mindboggling volume of customers, which would, in turn compensate for the extremely low fares that they would be charging.

A threshold is a dangerous thing though. If you put fares any lower than they need to be, the impact on the bottom line would be catastrophic. And especially if you do it in the middle of a customer slump, and rising competition. Yes, the government of India isn't very supportive either, in fact, it has its hands full with a certain Air India, which makes losses of Rs 5500 crore a year, or about a lakh rupees a minute(yes..that fucking much!!), which of course, wouldn't have got into this whole mess if it would just close down and pay its employees off for the remaining of the year(it would lose only Rs 3000 crore then). And well, maybe it shouldn't have ordered $9 billion of aircraft either, that might have saved it some Rs 45000 crore. But, hey, let not point fingers here.

As long as India has a population, and as long as businessmen have startup capital, airplanes will continue to fly in this country. There is nothing as seductive as the dream of seating a billion butts in flights, nor anything as lucrative. Thank God for airhostesses...

No comments:

Post a Comment